Azhan Hasan

Eco-innovation is a change in economic activities that mproves both the economic performance and evironmental performance of society. Improved performance is what counts. ln broad term, eco-innovation is defined as "the production, assimilation or exploitation of a product, produc;tion process, service or management or business methods that is novel to the firm and which results throughout its life cycle, in a reduction of environmental risk, pollution and other negative impacts of resources use (including energy use) compared to relevant alternatives." (Kemp 2007). Therefore, eco-innovation indicators are related to both the economic performance, as in terms of cost reduction, enhanced functionality and ultimately value creation and the environmental performance, as in terms of reduced effects of emissions, reduced resource depletion and other environmental improvements. lf there is improvement in one but not in other dimension, there is innovation if the one can more than compensate for the other; there then still is innovation but not eco-innovation. Eco-innovation are all measures of relevant actors - firms, politicians, unions associations, private households etc which develop new ideas, behavior, products and processes, apply or introduce them and which contribute to a reduction of environmental burdens or to ecologically specified sustainability targets. Ecoinnovation can be developed by firms or non-profit organizations, they can be traded on markets or not, their nature can be technological, organizational, social or institutional. The environmental policy and eco-innovation policy can be seen as compliment for each other. lnnovation policy can help to cut the costs of technological, institutional and social innovation. The performance characteristics of eco-innovations can be improved in the diffusion phase by coordinating action between environmental and innovation policy to achieve significant ecological impacts.